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Bond Market News
Keppel REIT to Buy Grade A Aussie Office for $234mn
November 30, 2021
Keppel Reit’s wholly-owned subsidiary has entered into an agreement to acquire and develop a Grade A freehold office building, Blue & William, in Sydney for A$327.7mn ($234mn). The acquisition is expected to be completed by end-2021, with completion of development estimated in mid-2023. Upon completion of the property, Keppel Reit’s AUM will grow to S$9bn ($6.6bn) across 11 properties in Singapore, Australia and South Korea. The Reit manager said it will finance the acquisition with AUD-denominated loans as a natural hedge alongside progressive payments to be made based on construction milestones. Assuming the acquisition was completed as of September 2021, Keppel Reit’s aggregate leverage would increase to ~39.9% from 37.6% before the transaction, as per estimates. The REIT manager said, “In line with the manager’s active portfolio optimisation strategy, this DPU-accretive investment brings in an initial net property income yield of 4.5%, which will enhance Keppel Reit’s overall portfolio returns”.
Keppel Reit’s SGD 3.15% Perps are trading a tad higher at 98.35 yielding 3.62%.
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